Lachlan Murdoch's move makes Ten purchase difficult for News

Dominic White

Lachlan Murdoch's promotion from News Corporation director to co-chairman would make it more difficult for News to acquire Ten Network Holdings without breaching current media ownership restrictions.

He will now be deemed by the Australian Communications and Media Authority to be a controller of News Corp, having swapped control of television assets for control of newspaper assets in key metropolitan Australian markets.

Because Mr Murdoch owns 100 per cent of radio group Nova Entertainment, if News were to buy Ten, he would fail the "two-out-of-three rule", which prevents anyone from owning more than two of a newspaper, TV ­station and radio licence in the same market. News, which publishes newspapers such as Sydney's Daily Telegraph and Melbourne's Herald Sun, has consistently denied it has any interest in acquiring Ten.

Mr Murdoch's return to a top-ranking role at News was made possible because he stood aside as chairman of the struggling third-placed commercial free-to-air broadcaster and unpicked his Ten Network Holdings shareholder association with Crown chairman James Packer.

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Mr Murdoch had been deemed to jointly control the biggest shareholding in the company because his 8.8 per cent was held in association with Mr Packer's, amounting to an effective stake of 17.6 per cent. He was deemed to control the company because his stake was more than 15 per cent.

However, his decision to unwind the deal as he stepped down as chairman to rejoin his father's News Corp and 21st Century Fox as co-chairman of both companies, means that he is no longer deemed to be in control of Ten.

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Billionaire and WIN Corp owner Bruce Gordon emerges as the biggest shareholder at Ten Network Holdings, with a 14.9 per cent stake, followed by mining billionaire Gina Rinehart, with a 9.9 per cent stake.

If Mr Murdoch had retained a controlling stake and joined News Corp in his new role, he would have failed the ACMA's two-out-of-three test under the Broadcasting Services Act.

The two-out-of-three rule is being reviewed, along with all broadcasting regulation, by the Abbott government but any changes are not expected to be proposed to Parliament until September.

Foxtel, which is 50 per cent owned by News Corp, is not covered by the two-out-of-three rules. However, Rod Sims, chairman of the Australian Competition and Consumer Commission has said he would look "very closely indeed" at any moves by Foxtel to acquire Ten because of "potential competition concerns in the market for top line sports." He has said that News' 50 per cent stake in Foxtel constitutes a "fair degree of influence."

Communications Minister Malcolm Turnbull was unaware of Mr Murdochs' shareholding and job changes, news of which spread as he was giving a speech at the Great Hall in Parliament House, Canberra at a reception for Free TV on Wednesday night.

As news spread, the attention of executives and MPs turned from Mr Turnbull's speech to their mobile phones as they searched for further news of the historic development in the Murdoch family saga.